Tariff hike : Power 'shock' or an 'eyeopener'

The recent tariff hike by Mumbai utilities especially Reliance Infrastructure Ltd. and BEST led to violent protests by people across Mumbai distribution area who on the behest of some political parties went on rampage destroying public property and bringing total chaos. But we need to ask ourselves that are these protests justified and that too in the manner in which these protests are 'organised'( to serve the political ambitions). From a consumer point of view, the protest is justified as this steep tariff hike is going to create a big hole in his pocket. But this tariff hike was inevitable due to variety of factors and so we should understand the rationale behind this.

First and the foremost thing is that we should understand the power scenario in India . In India, due to generation-demand mismatch , the power is sold on higher rates and as a result the distribution utilities are bound to pass this heat on the consumers.Now,in case of Mumbai, which enjoys zero load-shedding status on account of being the commercial capital, the gap between demand and supply is huge and so the mumbai utilities have to pay a higher price in order to meet the shortfall of power. And obviously the higher cost of power is to be borne by consumers. So this was one of the important reason for the price hike.

But who is responsible for this supply-demand gap which is responsible for purchase of costly power? Its the apathy shown by the government towards the power sector and lack of foresightedness which is responsible for the grim situation in which the state has been pushed by the so called 'visionary' leaders. In the last few years , practically no or negligible generation has been added in the state while the demand has continuously increased and this also includes the regime of the political parties which are spearheading the protests to further their own ambitions. And the most ironical part is that common man is taken for a ride by these parties who are just organizing protests to further their political goals .These agitations have more political tones with assembly elections approaching which is not going to solve this critical problem unless and until we try to find the out the root cause of the problem.

And the main cause is the huge gap between demand and supply. So the government will have to take extra-ordinary efforts to invite investments for adding new generating capacity in the state. Also the govt. should expedite the process of acquring land for the power projects which are on hold due to this land acquisition problem.

Also the following steps, if taken, will be instrumental in reducing the demand-supply gap which in turn will bring the much needed respite to the consumers in the form of economical power:

1) Mumbai should be allocated share in the central generating stations(CGS).
2) Mumbai should be allowed to draw from UI pool when the grid frequency is good and the power is available at cheaper rate.
3) The existing generation capacities should be expanded ( wherever possible) to meet the ever increasing demand as augmenting the capacity of existing power plant is less time consuming than installing in a new power plant.
4) The generation companies in Mumbai having surplus power should not be allowed to sell the power outside Mumbai when the city is reeling under severe power crisis. The sale of power should be allowed only when Mumbai is self-sufficient to meet its demand.
5) The CERC should put a tab on the prices of power purchased from the open market as this will curb the volatility of the prices.
6) All subsidies on power should be done away with as people will judiciously use power only when the pay the true power cost and not the subsidised one.


Also many people have this wrong notion that the utilities are responsible for effecting this steep hike which is not true. The electricity business is a highly regulated business and the utilities can not hike the tariff as per their whims and fancies. These prices are hiked by regulatory commissions which in our case is MERC.

So as an informed citizen , it should be our moral obligation to ask our leaders and representatives that what they have been doing all these years. We should refrain from falling prey to their ideas of adopting violent means to protest the tariff hike as that will only aggravate the problem instead of solving it.
Remember these protests are just poll gimmicks to futher their polictical ambitions and a face saving formula to hide their failures in adding new generation capacities in the state.

MUMBAI- Growing apathy towards elections

The Elections 2009 are different from other parliamentary elections as these elections are being held in the backdrop of so many important issues like recession, terrorism etc which will decide the future of India in its journey to become a super power. So it was but obvious that public especially those in Mumbai will take part in this democratic festival with full fervor.

It was expected that the tragic 26/11 terrorist attacks would galvanize the city and there will be a spirited participation of people from all walks of life in the electoral process.
But the voter turn-out on 30th April,the day Mumbai went to polls , belied all the expectations. On April 30th, as Mumbai voted, and camera crews whizzed around expecting a huge rush thronging polling booths, a certain reality dawned. It was evident that when it comes to choose between two V’s – Vote or Vaccation, many chose latter.
The people of this city, which is famous for its undying spirit, were angry at the unprofessional handling of the 26/11 terror attacks. This election they were expected to come out in huge numbers and vote for a stable government. But the JOSH seems to have died down.
It is ironical that the city which has major contribution in total tax collection in India failed( due to lesser contribution) when it came to exercising voting rights to elect people who will be deciding the use of taxpayer’s money.
At less than 43% voting percentage , it showed not just apathy, but sheer contemptuous disinterestedness.All media campaigns and Jaago-Re initiatives urging people to vote for change, vote for stability, vote for future seems to have fallen on deaf ears. One Lead India campaign cannot undo years of page 3 hard-sell.
But we need to find out the reason for the voter’s growing apathy towards the electoral process not only in Mumbai but all over India.
In todays scenerio when the election fever is scaling new heights daily , many voters are confused whether to exercise their fundamental right of voting or not? And if yes, then whom to vote for? Vote for the candidate or the party?Many a times the candidates seems promising but the party has a dubious history, or if the party seems encourging then the candidate has a shady history The big question is whom to select?
And let me remind you , the common man realizes that the elections are near only when the roads gets repaired, the potholes get filled in temporarily and the local politicians act as sychophants. I don’t understand why there is no retirement age for the political professionals. Besides there is no pre set eligibility criteria for the post of the first citizen and the prime minister of a country where more than a billion people thrive but there exists a qualification criteria even for a government clerk.We need to think seriously on this issue.

But what was the reason behind mystifying dip in voting numbers in Mumbai. Mumbai being the economic capital does not have a political character. It is a city with a commercial outlook , pregnant with career dreams , bare survival and the lure of endless monies and good fortunes.
It understands the language of Sensex,saving, success , growth & survival. Here issues like Godhra & Nandigram take a backseat when it comes to issues like credit policy, PLR, exchange rates. I am not saying that these issues are irrelevant but political issues are also important as they are also going to decide the future of India.

But what I observed that the so-called upper class has apathy towards elections and the common man still braved the scorching heat to discharge his duty as a responsible citizen and this should be solace for all of us as ,we, the common people are the pulse of this nation.
In-fact many of my colleagues took extra efforts and braved the Sun to take part in the electoral process.

So situation has certainly deteriorated in the past few years but the only silver lining in this cloud is that common public still believes that the only way to bring out the desired change is through democratic process.
All said and done, the political landscape in India would be one to watch out in the years to come!!

Sensex may give up recent gains, post elections

The sensex might see a downfall in case there is no clear mandate after elections. The market is not going to sustain recent rallies if there is a hung parliament,i.e. no party gets a clear majority to form government at the centre . This will be a shot in the arm of Left-parties and they will wield immense power in govt. formation which ,in turn, will not be a healthy sign for the battered Indian economy.

With the market not showing any downturn for some days, it can be assumed that the tough times are over. But you never know when market will take a turn contrary to the perception of masses. And the election results can play a spoilsport if third front ( i don't know whether it exists in reality or in election speeches) emerges as kingmaker. It is in the interest of Indian economy that any alliance( as chances of any single party getting the mandate are remote) gets a clear cut majority to form the govt. at the centre because only a strong govt. can take strong decisions to revive the economy.

Many analysts ,worth their names, have said that the recent upswing was a result of bear market rally. But whether this is a bull market rally or a bullish phase in a bear market is still debatable. One can go on arguing till the cows come home. But in my opinion, it is not for nothing that the market has reached these levels. There is something which has helped the market to bounce back to the current levels. Whether this rally continues after the elections is hard to predict at this juncture as a lot depends on the results.

As an investor we should not be concerned about whether its bullish rally or bearish one. Rather we should be more interested in following the trend. One thing i have learnt ( although after loosing some money) that never have pre-concieved notions about the market movement. Either get along with the trend or just stay away....or else you are inviting troubles.

Let us logically weigh the possible three outcomes of the elections:

(i) A Congress-led government at the centre will bring a sigh of relief to the markets as they are expected to take some hard decisions in the large interests of economy and if we are able to sustain the current bounce back, we will rally some more in salutation.

(ii) The BJP-led NDA govt. at the centre will be a positive sign for the entire broking community and the market will rally more.

(iii) And third-front coming to power or even emerging as kingmaker will be a serious concern as they will pose a threat to the economic reforms.

A Nielsen study indicates over 200 seats for the Congress-led UPA which is far removed from what other pundits are saying. If that is the case, then chances are that there will be a Cong led govt at the centre and this will certainly boost the economy. Having said that, there would still be a fair amount of nervousness leading up to counting day and one can expect unwinding of positions ahead of that which can lead to downturn in the sensex.

The degree of volatility would depend on the emergence of third front as kingmaker. However the possibility of market testing new lows seems to be a distant one. In addition what is seen as a bear market rally, positive news coming from US seems to play a dominant role in current market rally and hopefully the trend will continue in future.

" Happy investing....."

A Salute to The Spirit of Mumbai

Last year in August, I came to Mumbai with my baggage and dreams in my eyes of doing something big as so many people have done it and so many people will do it.
The first thing I noticed after reaching here was the fast life.
It seemed People do not have time for anything. Work has kept them away from everything. Initially one finds it difficult to cope with the Mumbai’s hectic life but in due course of time you become a part of the city and do not mind the hectic pace. How fast life in Mumbai is? At times you feel that Mumbai is a city where people are heartless and business-minded. But this is not always true.
Before coming to Mumbai, I had heard people talking about the undying spirit of Mumbai but never got to know what its all about.
When I recall what happened in Mumbai on 26th November, I am taken aback by the strength and resilience that Mumbaikars exhibited subsequently. That day I was puttering around my flat after a gruelling day at work, performing some mundane yet vitally important household chores. Suddenly I got a call from my close friend R. Sriram(who stays in Santacruz) who told me about the terrorist attack. Immediately I switched on my tv and what I saw was something which was mix of everything – the shock, the fear, the pain,the tears. But the way People helped each other out in such testing times was incredible and speaks volume of the spirit of Mumbai.

'The spirit of Mumbai' isn't just a pretty phrase — it's a reality that comes to the fore every time the city is struck by disaster .
But talking about the spirit of Mumbai without mentioning the life in local trains will be a great injustice to the whole story. Commuting through local trains is not an experience-its an ordeal, and if you want to see real spirit of Mumbai then the local trains are best option one can think of.
Everyday it’s a new experience here. What is Real Mumbai all about? Is it what we get to see everyday? People who are too hard-pressed for time to help themselves let alone help others; or people who go out of the way to help even strangers when disaster strikes.
I salute the undying spirit of Mumbai.

LALIT MODI- The new face of corporate India

The other day I was watching the IPL -2 post-match ceremony and the way Mr. Lalit Modi-the man who changed the landscape of Indian cricket by launching Indian Premier League, addressed all the cricket lovers, both in the stadium and watching from tv-sets , i am sure it left a mark in their hearts. Lalit Modi- the IPL Commissioner, has taken cricket into a new era, turning a sport that can be baffling to watch for five days into an action-packed game lasting for few hours. He has conceived and executed the idea of IPL with a spectacular success.

He is the man who was instrumental in the happy marriage of cricket and entertainment. This astute businessman was not only able to boost the revenues of BCCI through this new format of cricket,which is raking lot of moolahs, but also added glamour to it by inviting bollywood stars and people from corporate world to be stakeholders of IPL.

As the election dates clashed with IPL-2 and the Government showed its reluctance in providing adequate security arrangements , the fate of IPL-2 seemed to be hanging in air. Without Govt. support, it was obvious that its not going to be a smooth sailing for IPL-2 and cricet fans will be deprived of all the fun and entertainment provided by IPL

But Mr. Modi had other things in his mind. He decided to shift the season-2 of IPL to South Africa in order to keep his promise to all the cricket fans of organizing this tournament in April.And its worth mentioning that all the arrangements for organizing this mega-event were made in less than four weeks and it was possible because of the sheer commitment of Lalit Modi and his team.
The way he managed to organize IPL-2 in South Africa in such a short span, putting all the apprehensions aside, speaks volume of his managerial skills .

And with Mr. Lalit Modi as a lead anchor for IPL,the only thing which comes into my mind is:

"The difficult was completed immediately, it was the impossible which took little time."

Finally a full stop to The Satyam Saga

With TechMahindra finally getting the controlling stake after a 3-month drama, all the market speculations about the future of this so called India's Enron were put to rest on Monday bringing much needed respite for the employees and customers.Ever since Satyam's founder Raju confessed of a financial fraud, there was a big question mark on the fate of its employees and clients. But when TechMahindra clinched the deal by beating its rivals such as engineering conglomerate L&T and a group led by Mr.Wilbur Ross to acquire this battered firm, it came as a breath of fresh air after 3-months of ordeal for all the stakeholders of Satyam. Due to the sincere efforts and timely action of the government appointed board which was formed to oversee the resurrection process of the fraud-hit company, the future of many employees is now in safe hands and this is a major step in boosting the Indian Corporate image.
But this is just the ground work and a lot needs to be done . With its huge liability and long list of lawsuits, Satyam can be a white elephant for TechMahindra if not handled carefully.
Tech Mahindra faces the daunting task of reshaping Satyam, a company at the heart of India’s biggest corporate scandal.
And the good part about this saga is that satyam gives you a company picture not like Lehman Brothers or Enron where you find only buried souls finding their way to salvation.
But it remains to be seen whether TechMahindra , with its huge experience , is able to transform the maligned business firm into a profit-making company or not. Given the potential pitfalls which the new management still have to navigate, this seems to be a daunting task but not the impossible one.
Finally i would like to quote Euriprides who once said:
" There is in the worst of fortune the best chances for a happy change ."
And this seems more apt to the satyam saga.